Authorities Issue Charges Against CEO Of World's Once Largest Bitcoin Exchange


Authorities Issue Charges Against CEO Of World's Once Largest Bitcoin Exchange

Japanese police have arrested the CEO of Mt. Gox, once the largest bitcoin exchange in the world, for financial impropriety. The charges come in the wake of an unexplained loss of up to half a billion dollars of investor money and eventual closure of the exchange.

Mark Karpeles, 30, was arrested by police in Tokyo, Japan on Saturday. A statement from the company has confirmed the arrest and detention of the executive.

Karpeles is suspected of unduly accessing the popular exchange’s computer systems before falsifying data on the company’s outstanding balance. The accounts falsification resulted in the loss of over $387 million worth of bitcoins February last year.

Japanese law enforcement officials have traced $1 million drawn from the company’s operations to an account under the control of Karpeles.

Mt. Gox was the largest trader of the virtual currency until February when it stopped investors from accessing their bitcoins after attacks from online hackers. Later on, it declared the loss of 850000 bitcoins valued at $387 million at the time.

Initially, the company blamed the loss on a bug. Later on in February, the company filed for bankruptcy.

Customers and investors were left angered by the company’s accounting failures which had translated in millions in losses for them. In the coming days, the investors would find no rest. It was later revealed that the company had also lost $27 million in cash.

In March 2014, Mt. Gox revealed that it had found 200,000 lost bitcoins in a digital wallet that had not been in use. The virtual currency was valued at $116 million, bringing the number of lost coins down to 650,000, still a significant amount as that represented 7% of all bitcoins trading in the world.

A day before Karpeles was detained, the media had reported that he would be arrested “soon.” This prompted Karpeles to issue statement through the Wall Street Journal, terming the allegations as “false” and that he was going to “of course deny” them.

Japanese authorities are yet to charge the CEO. In Japan, authorities can detain individuals for weeks over before formally leveling charges on them.

It is through Karpeles’ financial impropriety that the world’s largest bitcoin exchange was brought to its knees. The company has yet to recover one year later and investors are yet to regain their losses.

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